Great Plains Energy Announces First Quarter Financial Results

    Business Editors/Energy Editors

    KANSAS CITY, Mo.--(BUSINESS WIRE)--May 4, 2005--Great Plains Energy Incorporated (NYSE:GXP) today announced first quarter 2005 earnings available for common shareholders of $19.8 million or $0.27 per share, compared to first quarter 2004 earnings of $26.9 million or $0.39 per share. Ongoing earnings, defined as Generally Accepted Accounting Principles (GAAP) earnings adjusted for certain unusual items, were also $19.8 million or $0.27 per share this year, compared to $29.1 million or $0.42 per share in the first quarter of 2004.
    Scheduled plant maintenance in the first quarter of 2005, combined with less than normal scheduled maintenance in the first quarter last year, was the primary driver of lower earnings at Kansas City Power & Light (KCP&L) compared to the same quarter last year. Total plant outages led to 30% less wholesale MWh sales and 27% less wholesale revenue than in the same period last year. KCP&L maintenance expense also increased by $8.9 million compared to the same period last year due primarily to the plant outages and an ice storm in January.
    Chairman Michael Chesser commented: "Although our front-end loaded maintenance schedule reduced KCP&L's earnings in the first quarter, this is simply a timing issue, and we remain on track to deliver on our 2005 guidance. Additionally, maintenance efforts at our LaCygne and Iatan plants resulted in uprates of approximately 30 MW for KCP&L's rated capacity."

    Kansas City Power & Light

    During the first quarter, KCP&L, an integrated, regulated electric utility, announced the filing of its regulatory agreement with the Missouri Commission, which outlines the specifics of the Company's $1.3 billion comprehensive energy plan. The energy plan includes building an 800-900 MW coal plant (of which KCP&L will own 500 MWs), 100-200 MWs of wind generation, environmental upgrades, and demand, efficiency and affordability programs. On April 28, 2005, KCP&L announced that it had signed and filed a substantially similar agreement with the Kansas Commission. The regulatory agreements provide funding mechanisms that are anticipated to preserve KCP&L's credit quality and the Company's financial strength.
    KCP&L reported earnings for the first quarter of 2005 of $10.8 million or $0.15 per share, compared to $21.6 million or $0.31 per share in the same period of 2004. First quarter revenues were $233.2 million, down 5% from $246.5 million in the first quarter of 2004.
    Retail revenues were flat at approximately $189 million in the first quarter of 2005, compared to the same period last year. Normalized for weather variances in both periods, KCP&L's quarter over quarter retail revenue growth was just under 2%.
    In addition to the scheduled plant maintenance, the Wolf Creek nuclear facility also experienced a 10-day forced outage. As a result of these plant outages, net generation was down 8%, which was the primary driver for 30% fewer wholesale MWhs sold, compared to the first quarter of 2004. Most of KCP&L's scheduled maintenance for 2005 was achieved in the first quarter, with Wolf Creek's refueling outage and one other small scheduled outage to be completed in the second quarter of 2005, in addition to the mid-April completion of the LaCygne plant maintenance previously mentioned.
    Pension expense was $1.9 million higher than in the first quarter of 2004. However, the $22 million pension cap contained in the regulatory agreements, once approved by the Commissions, is anticipated to result in approximately $2.5 million of first quarter 2005 pension expense being reclassified through the creation of a regulatory asset. First quarter taxes of $1.5 million were substantially lower compared to $12.3 million in 2004 driven by lower taxes at KCP&L. KCP&L's income taxes decreased as a result of lower income, as well as a $1.5 million allocation of tax benefits from holding company losses pursuant to the Company's inter-company tax allocation agreement.

    Strategic Energy

    Strategic Energy, a competitive electricity supplier, continues to experience a challenging market environment. Earnings for the first quarter were up 37% to $12.8 million or $0.17 per share, compared to $9.3 million or $0.13 per share last year. A $5.3 million net increase in fair value related to energy contracts and $1.2 million from the reversal of a tax reserve were the primary drivers of the earnings growth. These drivers increased gross margin per MWh by approximately $1.40 resulting in a $7.35 gross margin per MWh in the quarter compared to $6.85 in the same quarter last year. Gross margin per MWh on new business in the quarter was approximately $3.15 reflecting the continued impact of the challenging environment.
    In some markets, wholesale power prices year-to-date have continued to rise faster than host utility rates. In markets where this occurs, the savings competitive suppliers can offer to customers are reduced or in some markets are unavailable. Additionally, in those markets where wholesale power prices are lower than host utility rates, Strategic Energy continues to face strong competition from other competitive suppliers.
    Strategic Energy grew revenues by 6% during the first quarter to $311.8 million, compared to $294.5 million in the first quarter of 2004 due to increases in power prices and a 5% increase in MWhs delivered. The combination of first quarter MWhs delivered and backlog for the remainder of 2005 improved modestly to 16.6 million MWhs, up 1.2 million MWhs from the 2005 backlog reported at the end of the fourth quarter of 2004. The average length of contracts signed in the quarter was approximately 10 months, unchanged from the previous quarter. The customer retention rate decreased from 76% in the fourth quarter of 2004 to approximately 72% in the first quarter of 2005.

    Non-GAAP Financial Measure

    Great Plains Energy provides in its earnings releases descriptions of "ongoing earnings" in addition to earnings calculated in accordance with GAAP. Great Plains Energy also provides its earnings guidance in terms of ongoing earnings. Ongoing earnings is a non-GAAP financial measure that differs from GAAP earnings because it excludes the effect of certain unusual items. Ongoing earnings for historical periods are reconciled to GAAP earnings in Attachments B.
    Great Plains Energy believes ongoing earnings provides to investors a useful indicator of its results that are comparable among periods because it excludes the effects of unusual items, which may occur on an irregular basis. Investors should note that this non-GAAP measure involves judgments by management including whether an item is classified as an unusual item. Ongoing earnings is used internally to measure performance against budget, in reports for management and the board of directors, and in determining incentive compensation.

    Great Plains Energy Incorporated (NYSE:GXP) headquartered in Kansas City, Mo., is the holding company for Kansas City Power & Light Company, a leading regulated provider of electricity in the Midwest, and Strategic Energy LLC, a competitive electricity supplier. The Company's web site is www.greatplainsenergy.com.

    CERTAIN FORWARD-LOOKING INFORMATION -- Statements made in this release that are not based on historical facts are forward-looking, may involve risks and uncertainties, and are intended to be as of the date when made. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Company is providing a number of important factors that could cause actual results to differ materially from the provided forward-looking information. These important factors include: future economic conditions in the regional, national and international markets, including but not limited to regional and national wholesale electricity markets; market perception of the energy industry and the Company; changes in business strategy, operations or development plans; effects of current or proposed state and federal legislative and regulatory actions or developments, including, but not limited to, deregulation, re-regulation and restructuring of the electric utility industry and constraints placed on the Company's actions by the Public Utility Holding Company Act of 1935; adverse changes in applicable laws, regulations, rules, principles or practices governing tax, accounting and environmental matters including, but not limited to, air quality; financial market conditions and performance including, but not limited to, changes in interest rates and in availability and cost of capital and the effects on the Company's pension plan assets and costs; ability to maintain current credit ratings; inflation rates; effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual commitments; impact of terrorist acts; increased competition including, but not limited to, retail choice in the electric utility industry and the entry of new competitors; ability to carry out marketing and sales plans; weather conditions including weather-related damage; cost, availability, quality and deliverability of fuel; ability to achieve generation planning goals and the occurrence of forced generation outages; delays in the anticipated in-service dates of additional generating capacity; nuclear operations; ability to enter new markets successfully and capitalize on growth opportunities in non-regulated businesses; performance of projects undertaken by the Company's non-regulated businesses and the success of efforts to invest in and develop new opportunities; and other risks and uncertainties. This list of factors is not all-inclusive because it is not possible to predict all factors.

    Attachment A

GREAT PLAINS ENERGY Consolidated Statements of Income (Unaudited)

Three Months Ended March 31 2005 2004 ====================================================================== Operating Revenues (thousands, except per share amounts) Electric revenues - KCP&L $233,215 $246,535 Electric revenues - Strategic Energy 311,316 294,111 Other revenues 583 832 --------------------- Total 545,114 541,478 ---------------------------------------------------------------------- Operating Expenses Fuel 41,490 40,600 Purchased power - KCP&L 11,490 12,467 Purchased power - Strategic Energy 277,866 264,354 Other 79,895 79,734 Maintenance 29,358 20,471 Depreciation and amortization 37,862 36,520 General taxes 25,856 24,721 Gain on property (519) (35) --------------------- Total 503,298 478,832 ---------------------------------------------------------------------- Operating income 41,816 62,646 Non-operating income 1,924 1,412 Non-operating expenses (1,315) (2,902) Interest charges (17,487) (18,339) ---------------------------------------------------------------------- Income from continuing operations before income taxes, minority interest in subsidiaries and loss from equity investments 24,938 42,817 Income taxes (5,291) (12,163) Minority interest in subsidiaries 888 (845) Loss from equity investments (345) (307) ---------------------------------------------------------------------- Income from continuing operations 20,190 29,502 Discontinued operations, net of income taxes - (2,178) ---------------------------------------------------------------------- Net income 20,190 27,324 Preferred stock dividend requirements 411 411 ---------------------------------------------------------------------- Earnings available for common shareholders $19,779 $26,913 ======================================================================

Average number of common shares outstanding 74,436 69,257

Basic and diluted earnings (loss) per common share Continuing operations $0.27 $0.42 Discontinued operations - (0.03) ---------------------------------------------------------------------- Basic and diluted earnings per common share $0.27 $0.39 ----------------------------------------------------------------------

Cash dividends per common share $0.415 $0.415 ======================================================================

    Attachment B

GREAT PLAINS ENERGY Consolidated Earnings and Earnings Per Share Three Months Ended March 31 (Unaudited)

====================================================================== Earnings per Great Plains Earnings Energy Share ---------------- ---------------- 2005 2004 2005 2004 ---------------------------------------------------------------------- (millions)

KCP&L $10.8 $21.6 $0.15 $0.31 Strategic Energy 12.8 9.3 0.17 0.13 KLT Investments 3.0 3.2 0.04 0.05 Other (6.4) (4.6) (0.09) (0.06) ----------------------------------- Income from continuing operations 20.2 29.5 0.27 0.43 KLT Gas discontinued operations, net of income taxes - (2.2) - (0.03) Preferred dividends (0.4) (0.4) - (0.01) ---------------------------------------------------------------------- Earnings available for common shareholders $19.8 $26.9 $0.27 $0.39 ----------------------------------------------------------------------

Reconciliation of GAAP to Non-GAAP Earnings available for common shareholders $19.8 $26.9 $0.27 $0.39 Reconciling items KLT Gas -- Discontinued operations - 2.2 - 0.03 ---------------------------------------------------------------------- Ongoing earnings $19.8 $29.1 $0.27 $0.42 ======================================================================

    Attachment C

GREAT PLAINS ENERGY Summary Income Statement by Segment Three Months Ended March 31, 2005 (Unaudited)

====================================================================== Consolidated KCP&L Strategic Other GPE Energy ---------------------------------------------------------------------- (millions) Operating revenues $545.1 $233.2 $311.8 $0.1 Fuel (41.5) (41.5) - - Purchased power (289.4) (11.5) (277.9) - Other operating expense (135.0) (118.2) (10.7) (6.1) Depreciation and amortization (37.9) (36.3) (1.5) (0.1) Gain on property 0.5 - - 0.5 ---------------------------------------------------------------------- Operating income 41.8 25.7 21.7 (5.6) Non-operating income (expenses) 0.6 0.3 0.4 (0.1) Interest charges (17.5) (14.6) (0.8) (2.1) Income taxes (5.3) (1.5) (8.5) 4.7 Minority interest in subsidiaries 0.9 0.9 - - Loss from equity investments (0.3) - - (0.3) ----------------------------------- Net income (loss) $20.2 $10.8 $12.8 $(3.4) ---------------------------------------------------------------------- Earnings (loss) per GPE common share $0.27 $0.15 $0.17 $(0.05) ======================================================================

    Attachment D

GREAT PLAINS ENERGY Consolidated Balance Sheets (Unaudited) March 31 December 31 2005 2004 ====================================================================== ASSETS (thousands) Current Assets Cash and cash equivalents $84,671 $127,129 Restricted cash 10,050 7,700 Receivables, net 284,156 247,184 Fuel inventories, at average cost 24,908 21,121 Materials and supplies, at average cost 55,704 54,432 Deferred income taxes 6,736 13,065 Assets of discontinued operations - 749 Derivative instruments 30,745 6,372 Other 18,570 14,485 ------------------------ Total 515,540 492,237 ---------------------------------------------------------------------- Nonutility Property and Investments Affordable housing limited partnerships 40,343 41,317 Nuclear decommissioning trust fund 85,112 84,148 Other 34,432 32,739 ----------------------- Total 159,887 158,204 --------------------------------------------------------------------- Utility Plant, at Original Cost Electric 4,857,076 4,841,355 Less-accumulated depreciation 2,239,908 2,196,835 ----------------------- Net utility plant in service 2,617,168 2,644,520 Construction work in progress 67,327 53,821 Nuclear fuel, net of amortization of $130,908 and $127,631 33,635 36,109 ------------------------ Total 2,718,130 2,734,450 ---------------------------------------------------------------------- Deferred Charges Regulatory assets 144,901 144,345 Prepaid pension costs 111,673 119,811 Goodwill 86,767 86,767 Other deferred charges 70,035 63,087 ------------------------ Total 413,376 414,010 ---------------------------------------------------------------------- Total $3,806,933 $3,798,901 ======================================================================

GREAT PLAINS ENERGY Consolidated Balance Sheets (Unaudited) March 31 December 31 2005 2004 ====================================================================== LIABILITIES AND CAPITALIZATION (thousands) Current Liabilities Notes payable $17,000 $20,000 Commercial paper 9,200 - Current maturities of long-term debt 398,505 253,230 EIRR bonds classified as current 85,922 85,922 Accounts payable 198,378 199,952 Accrued taxes 42,877 46,993 Accrued interest 13,051 11,598 Accrued payroll and vacations 23,569 32,462 Accrued refueling outage costs 14,903 13,180 Supplier collateral 10,050 7,700 Liabilities of discontinued operations - 2,129 Other 27,933 24,931 ------------------------ Total 841,388 698,097 ---------------------------------------------------------------------- Deferred Credits and Other Liabilities Deferred income taxes 640,151 632,160 Deferred investment tax credits 32,615 33,587 Asset retirement obligations 115,489 113,674 Pension liability 96,181 95,805 Other 89,577 88,524 ------------------------ Total 974,013 963,750 ---------------------------------------------------------------------- Capitalization Common shareholders' equity Common stock - 150,000,000 shares authorized without par value 74,587,492 and 74,394,423 shares issued, stated value 771,181 765,482 Unearned compensation (2,519) (1,393) Capital stock premium and expense (32,060) (32,112) Retained earnings 440,378 451,491 Treasury stock - 28,488 shares, at cost (856) (856) Accumulated other comprehensive loss (32,331) (41,018) ------------------------ Total 1,143,793 1,141,594 Cumulative preferred stock $100 par value 3.80% - 100,000 shares issued 10,000 10,000 4.50% - 100,000 shares issued 10,000 10,000 4.20% - 70,000 shares issued 7,000 7,000 4.35% - 120,000 shares issued 12,000 12,000 ------------------------ Total 39,000 39,000 Long-term debt 808,739 956,460 ------------------------ Total 1,991,532 2,137,054 ---------------------------------------------------------------------- Commitments and Contingencies ---------------------------------------------------------------------- Total $3,806,933 $3,798,901 ======================================================================

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CONTACT: Great Plains Energy Incorporated Media Contact: Tom Robinson, 816-556-2902 or Investor Contact: Todd Allen, 816-556-2312

KEYWORD: MISSOURI INDUSTRY KEYWORD: OIL/GAS ENERGY UTILITIES EARNINGS SOURCE: Great Plains Energy Incorporated

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